Trade and Diversity: Is There a Case for 'Cultural Protectionism?'
In contrast to the predictions of standard models of international trade, globalization critics are claiming that trade destroys diversity. We demonstrate that with endogenous sunk costs, trade integration in horizontally differentiated industries can indeed lead to a fall in diversity. Consumers are faced with a tradeoff between gains in real income and a loss in diversity, so that the impact on welfare is ambiguous. However, it is possible through fiscal policies to replicate pre-trade choices and still realize gains in real income. Thus, calls for a 'cultural protectionism' are not justified. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2006.
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Volume (Year): 7 (2006)
Issue (Month): (November)
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- Francois, Patrick & van Ypersele, Tanguy, 2002. "On the protection of cultural goods," Journal of International Economics, Elsevier, vol. 56(2), pages 359-369, March.
- Eckhard Janeba, 2004. "International Trade and Cultural Identity," NBER Working Papers 10426, National Bureau of Economic Research, Inc.
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- Steven T. Berry & Joel Waldfogel, 2001. "Do Mergers Increase Product Variety? Evidence from Radio Broadcasting," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 1009-1025.
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